Hagel's plan could mean RIFs, freezes, reorganization

Jul. 22, 2013 - 06:04PM
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Defense Secretary Chuck Hagel last week announced his plan to 'pare back the world's biggest back office.' (Defense Department)

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Defense Secretary Chuck Hagel’s plan to cut funding for Pentagon headquarters staffs by 20 percent could require major restructuring, new information technology investments, layoffs and other moves over the next six years.

Hagel announced the plan while addressing civilian personnel at Jacksonville Naval Air Station, Fla., one of a series of talks on a trip that took him to threemilitary installations in three days.

The cuts target Hagel’s staff in the Office of the Secretary of Defense (OSD), along with the Joint Staff and the headquarters of each of the four military services, which together employ thousands of Senior Executive Service members and senior GS civilians, along with military personnel andcontractors.OSD alone has more than 2,500 government positions, while the Joint Staff has more than 4,200 military and civilian positions. Those numbers don’t include contract employees; DoD, like other agencies, has difficulty tracking them.

“Nobody can tell you with any precision the number of contractors,” said Arnold Punaro, a retired Marine Corps major general and long-time critic of Pentagon bloat.

The reductions, which would save between $1.5 billion and $2 billion, would not start until 2015, and continue through 2019. By comparison, furloughing some 650,000 civilian workers for 11 days this year will save $1.8billion to meet sequester-related budget cuts with another round of across-the-board spending reductions possible in 2014.

Now comes the hard part: Making it work.

“It’s a huge management challenge,” said Maren Leed, a former Defense Department official who is now a senior adviser at the Center for Strategic and International Studies, a private think tank.

Cutting by attrition would be the easiest solution, she said, but that risks “structural imbalances” and potential voids where critical skills are needed. But a straight reduction in force is politically problematic, she said.

Chuck Wald, a retired Air Force general who now heads the defense practice at management consulting firm Deloitte, said the danger is that the Pentagon will take a “salami slice” approach, making a series of across-the-board cuts that treat everyone the same regardless of role or mission. He said DoD officials should apply commercial business practices, including more reliance on information technology and make — if needed — reductions in force. The department also should seize the opportunity to conduct its first “bottom-up review” since the mid-1990s to resize itself for a leaner future, he added.

“I think everything is on the table,” he said.

Gregg Prillaman, a former human resources executive at the Homeland Security and Defense departments, also sees potential for IT to save money and manpower through greater automation and shared services, particularly if spread throughout the entire department.

“We’re talking about saving millions and millions of dollars, not just nickels and dimes,” Prillaman said.

In past downsizings, Defense officials struggled to retain the right workforce mix. During the 1990s, the result was “significant imbalances in terms of shape, skills and retirement eligibility,” the Government Accountability Office told lawmakers last year. Particularly hard-hit was the acquisition workforce, which was put on the verge of “a retirement-driven talent drain” after 11 straight years of downsizing, according to Brenda Farrell, a director for defense capabilities and management. She spoke at a House Armed Services subcommittee hearing last July.

The Defense management ranks have remained largely unscathed by tighter budgets. Almost three years ago, then-Defense Secretary Robert Gates vowed to freeze the number of positions at the Office of the Secretary of Defense, a half-dozen combatant commands and various Defense agencies. Instead, the total grew by more than 15 percent from 2010 to 2012, according to an analysis by Defense News, a sister publication of Federal Times.

“How is this going to be different?” Leed asked. “I don’t know that it will be.”

Success may hinge in part on the leadership’s willingness to roll back bureaucratic expansions. OSD’s original task, for example, was to set policy and provide oversight, Punaro said. But over time, the office has steadily expanded into the program management tasks already handled by the military services.

“OSD should focus on their core function and not try to be mini-military departments,” Punaro said.

An added complication for DoD planners is the growth in the contractor workforce since the last big downsizing of the 1990s. OSD, for example, has roughly 2,500 positions, but the total staff size is closer to 5,000 when contract staff, reservists and detailees are figured in, according to a 2010 review by Punaro.

Companies that provide everyday administrative services will face reductions, said Wald. But DoD will still need “strong outside advisory support to do the job well,” he said.

In place of incremental cuts, the Pentagon should also consider eliminating entire offices regarded “as less than essential,” said Diane Disney, who oversaw DoD civilian personnel policy during much of the Clinton administration. Officials should also keep in mind that every drawdown has unintended consequences, she said.

By one yardstick, the 1990s downsizing that followed the end of the Cold War was “enormously successful,” Disney said, because it cut employees without hurting the mission. But a hiring slowdown also meant that the number of DoD civilian workers in their 20s fell by more than half.

The young, she added, “are always at risk.”

Hagel’s plan drew praise from some quarters.

“I think it’s an excellent first step,” said retired Vice Adm. Norbert Ryan, president and CEO of the Military Officers Association of America and a former chief of naval personnel.

“It can’t be just about what are we going to cut,” Ryan said. “What are we going to reorganize, what are we going to realign to accomplish the mission better?”